The U.S. business tax rate was (until recently) one of the world highest. Many argued that a lower business tax rate was needed because it would lead to: (1) higher employment and (2) lower consumer prices. Using the concepts of “market equilibrium” and “supply shifters” explain why a lower business tax rate would likely produce these two beneficial outcomes. Prepare generic market demand and market supply curves (for any market) to explain your answer.

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A lower tax lowers the cost of production and encourages firms to incr... View the full answer